Since the very beginning of FPMD, I've been recommending all graduating medical students to consider signing onto Public Service Loan Forgiveness (PSLF) if their residency training institution qualifies. PSLF was literally the first post on FPMD. Despite the uncertainty regarding the future of PSLF, the program remains an attractive option for past and current grads. Yet I still get resistance from some students for reasons I will discuss below. Let's address each of these commonly held "alternative facts". Fortunately, the "facts" can be easily found at the Department of Education's publically available website on PSLF.

Alternative Fact - "If I end up having loans forgiven at the end of PSLF, I have to pay income tax on the forgiven amount."

Alternative Fact - "I don't want to be stuck working for a public service employer if I change my mind in the future."

Fact - PSLF is not an obligatory program. If you choose to leave your PSLF-qualifying employer for a non-qualifying employer, then your monthly payments will not count toward the 120 required payments for PSLF. In short - you are not stuck, but you do give up the benefit of loan forgiveness if you choose to work for a non-qualifying employer. Seems fair.

Alternative Fact - "It would be near impossible to find a job that qualifies for PSLF when I'm done with training."

Fact - According to the American Hospital Association (AHA), there are a total of 5,564 registered hospitals in the US. Of which, 2,845 are Nongovernment Not-for-Profit Community Hospitals; 983 are State and Local Government Community Hospitals; and 212 are Federal Government Hospitals. That means greater than 72% of all hospitals in the US would be qualifying employers under the PSLF. Of course, not everyone will choose to become a hospital employee and your particular employment situation may vary, but I would not be overly worried about your employment prospects.

Alternative Fact - "I am almost done with my residency, there is no point in signing up for PSLF now."

Fact - A PSLF-qualifying monthly payment is a payment that you make

after October 1, 2007;

under a qualifying repayment plan;

for the full amount due as shown on your bill;

no later than 15 days after your due date; and

while you are employed full-time by a qualifying employer.

What this means is that Fedloans will examine your PSLF Employment Certification Forms (ECFs) and count all of your qualifying payments retroactively dating back to 10/1/2007. You will receive a letter that looks like this when they're done informing you of how many qualified payments you have made.

There you have it - 4 commonly encountered "alternative facts" regarding Public Service Loan Forgiveness (PSLF). As we near October 2017 when the very first batch of borrowers become eligible for forgiveness, I anticipate to hear more about the program, especially bumps along the way (See Work as a public servant and get your student loan forgiven? Not for these people). There are some who believe that the entire program is a ticking financial time bomb waiting to blow up in Uncle Sam's face. Even so, I continue to recommend all graduating medical student to at least consider PSLF in managing their student loan debt. In its current form, PSLF remains a generous program and may end up saving you hundreds of thousands of dollars in the long run.

Sponsor Highlight

Chad Chubb, CFP ® founded WealthKeel LLC to help physicians navigate the complexities of financial planning. Today, we utilize true financial planning and custom-craft plans for residents and young doctors in the Philadelphia area and across the United States. From investments to insurance and student loans to goal planning, we tailor a plan to address your specific needs and circumstances. We will be by your side, today, tomorrow, and for decades to come to help you plan and build for all of life’s course corrections. Schedule your free introduction call online and see if we are a good fit for you.

Dr. Bo Liu is an aspiring radiologist-in-training and the founder and editor of the White Coat Money Blog. He has an interest in interventional radiology and helping his medical colleagues get ahead in this mad world of medicine and money. When he's not crushing the list at the PACS station or typing up your next favorite blog post, you can usually find him at the local badminton club, movie theater or the most recently opened restaurant.

Support Future Proof MD

Future Proof, MD is FREE for you to enjoy. However if you support our mission, please considering supporting us financially in one of the following ways. A small percentage of your purchase will go to support Future Proof and it costs you NOTHING extra.

Advertising Disclosure: Futureproofmd.com may have financial relationships with services and/or products mentioned. Futureproofmd.com may be compensated if visitors click on link-outs and make a purchase with a service provider/merchant mentioned. This may impact how and where products appear on this site.

Disclaimer: Futureproofmd.com is provided for informational purposes only. This website does not provide professional legal, financial, accounting or tax advice. This is an independently-owned site and all opinions expressed are my own and have not been reviewed, approved or otherwise endorsed by any third-party. Always consult an appropriate professional before making your personal financial decisions.